Health insurance coverage continues to be unaffordable for many. Those eligible for Medicaid or who receive generous subsidies through the Individual market are largely shielded from these costs. And many who have employers that cover most of their premiums also are protected, though they may still have large out-of-pocket costs for deductibles, co-payments, and co-insurance.
For those who must purchase their own insurance, or whose employers don’t offer generous coverage — or any coverage — things just keep getting worse. And employers, large and small, are also feeling the pain as premium increases crowd out other needs such as wages or force them to reduce employee benefits.
Fall is generally open enrollment season for those purchasing health insurance. For the NJ Individual market, 2023 rates are increasing an average of 8.8 percent and for the Small Group (2-50 employees) the average increase is 9.3 percent. The increases are even higher for the State’s employee health benefits program, where increases are pegged at 22.8 percent for county and local groups. The increase would have been just as high for State employees but for a one-time state subsidy.
These rate increases sound an alarm we must heed. First, we should not be caught off guard each fall. Throughout the year, the carriers and actuaries track this information and in the Small Group market adjust the premium rates quarterly. This information should be used by decisionmakers. Next, for all the talk of moving to patient-centered care and paying for value, much more needs to be done to modernize New Jersey’s employee benefit designs and to update state regulation of the markets. Strategies to reduce health care and insurance costs exist in multiple reports, including from the Quality Institute, the Rand Corporation, and in recommendations from the current and previous administrations.
- Updating drug formulary rules;
- Implementing Reference Based Pricing to reduce price variation and drive down prices;
- Adopting plan benefit designs to move care to lower cost, yet just as safe or safer, settings; and
- Increasing reimbursement for high value care focused on longer term population health — such as primary care and integrating mental health and primary care.
While we know what changes are needed to lower costs without sacrificing the quality of our health care, we haven’t demonstrated the will to implement or enforce these changes. Until we take on the hard work of changing regulations, benefit designs, and payment models, premiums will continue to rise. The reasons for these increases are many, including rising labor and supply costs, but also use of unnecessary or inappropriate care, and avoidable administrative costs. Plus, the system’s financial incentives are structured to continue rather than deter these cost-driving behaviors. Will the 2023 double digit increases catalyze change?
I certainly hope so. We hope you, our members, will join us in calling for changes to make health coverage more affordable. This fall, as usual, the leaves are changing, and we should too.